[1] http://www.teslamotors.com/blog/dual-motor-model-s-and-autop...
Road signs also have situational contexts. e.g. in the UK there are road signs indicating a max speed for an upcoming sharp bend (or series of bends) in the road. There isn't always a matching speed limit sign after the bend because drivers are assumed to work that out for themselves. But will the cars do so? Or will your self-driving car get stuck at the lower speed?
That also avoids the enforcement problems such as where the new limit should being and end, and the difficulty of measuring vehicle speed through a corner.
You (and parents) vastly overestimate difficulty. They are reflective, high contrast, using known font and very limited symbols (0-9). Car CV systems can distinguish pedestrians from background, they can read a freaking sign.
Sub signs I'll give you. Don't have any where I live though.
Compared to all the other things it must do reading signs is on the easy list.
The MobileEye system in the Tesla (and other manufacturers) has some of the most sophisticated CV software on the road - not just scanning for road signs, but identifying road markings, lane markings, curbs, obstructions, traffic signals, etc.
Tesla is most likely using their machine vision system to identify speed limit signs, and then incorporate this data into their mapping data.